The Power of ONE: Building Treasury’s Digital North Star
By Eleanor Hill, Editor
Created from a triple merger, Ocean Network Express (ONE) had just nine months to digitise, streamline and automate treasury processes. Here, Toshiaki Ichida, General Manager, Treasury, ONE, is joined by Ziad Kabbara, Global Sector Head, Transportation, Aviation and Logistics, and Clarice Kwa, Vice President, Transportation, Aviation and Logistics, Global Liquidity and Cash Management, HSBC, to discuss highlights of ONE’s treasury transformation journey – ranging from robotic process automation to data visualisation.
Headquartered in Singapore, ONE is the world’s sixth largest container shipping company. It was formed in 2017 as the result of a merger between the three biggest Japanese shipping lines: K-Line, Mitsui O.S.K. Lines (MOL) and Nippon Yusen Kaisha (NYK). From its inception, ONE’s management team has looked to accelerate growth by leveraging technology to: enhance existing business models; develop innovative services for current markets; create value in new markets; and challenge the industry status quo with fresh digital services (see box 1).
Box 1: Digital is in ONE’s DNA
In April 2019, ONE established the Digital Container Shipping Association (DCSA) with A.P. Moller- Maersk, Hapag-Lloyd, and MSC. The goal of the new association is to pave the way for interoperability in the container shipping industry through digitisation and standardisation. In July 2019, ONE joined TradeLens, a society to digitise the global supply chain by improving the precision of tracking shipments in real time.
The vision for ONE’s treasury team was no different: digitisation was the order of the day. But a significant challenge lay ahead, as Ichida explains: “The triple merger meant that three individual treasury departments needed to be transformed into a single, efficient treasury structure. Each individual treasury had different systems, however, as well as disparate bank accounts, workflows, cultures and operating models. To complicate matters further, we had only nine months to put in place a global cash management set-up – and our cash transactions are widespread throughout the world, resulting in a dispersed and complex operating cash flow.”
Single bank strategy
Ichida and his team decided that the best way to rise to these challenges would be to deploy a single bank strategy. “The aim was to select a partner bank that could help us centralise cash management at the company’s global headquarters in Singapore – through the use of cutting-edge technology, and a global network,” he explains. “We not only wanted to achieve better visibility of cash and greater cash efficiency across the 44 markets we operate in, but also to have a one-stop shop for support around any issues.”
Choosing a single global banking partner is not a decision to be taken lightly, but Ichida had no hesitation in nominating HSBC Global Liquidity and Cash Management to take up the mantle, “thanks to the bank’s proven track record of helping corporates to digitise, automate and centralise cash management, not to mention its global presence”.
Kabbara echoes this: “Being a true partner for our clients is not only about having a presence in 67 markets or covering 90% of global trade and capital flows. We recognise that corporates also need strategic support as they navigate today’s challenges and transform their businesses for the future.
“So, while we understood that ONE was looking to leverage our global network and digital innovations to transform its treasury function, we also knew that Ichida wanted to push the boundaries of the possible – drawing on HSBC’s sector expertise to challenge industry conventions, and exploring the cutting edge of cash management through our regional insight.”
With this in mind, the two organisations have since worked together on ONE’s digital transformation journey, achieving four major milestones thus far.
First was the roll-out of a host-to-host (H2H) enabled enterprise resource planning (ERP) system linked to SAP HANA. As HSBC’s Kwa explains: “Technology was always going to be key to making it easier for ONE to have visibility and control over its cash balances – so the HSBC team worked closely with ONE’s finance function to put in place a solid foundation for the journey ahead. The ERP link went live in April 2018 and has proven extremely beneficial for ONE.”
Ichida expands on this, adding: “The ERP link technology enables us to swiftly recognise and directly control the cash in all the operating bank accounts, even under a local entity’s name. We now have control over 85% of our entire operating cash, the majority of which sits with HSBC.”
With the treasury technology backbone in place, it was time to look for efficiency gains that could be layered on top. “This was especially relevant since ONE has a relatively small treasury team consisting of just five full-time employees,” notes Kwa. Setting up an auto-sweep was therefore the second major project tackled by ONE and HSBC in a bid to centralise all cash at the corporate headquarters on a daily basis, without manual intervention.
Speaking about the successful initiative, Ichida notes: “This has enabled us to merge our corporate cash flow and our business operation cash flows in the same currency into one cash pool. As a result, it is easier for us to minimise the excess cash in each currency because we can monitor only one cash pool in each currency. We have therefore successfully reduced the excess cash in each currency by 50-60%. Our foreign exchange [FX] transaction volume has also been reduced by netting our internal buy and sell requirements in each currency.”
In search of further cash and liquidity management efficiencies, ONE’s treasury team then decided to implement HSBC’s Liquidity Management Portal. According to Kabbara, the portal is designed to “give clients a clearer picture of their cash position globally and enable them to make faster and more informed decisions about deploying funds”. Among the particularly useful features for ONE, Kabbara notes, is a Liquidity Management Dashboard, which uses data visualisation to give treasurers an accessible, real-time view of their cash and cash-equivalents, across multiple banks and products.